The worth of bitcoin broke $100,000 for the primary time ever early Thursday morning, setting yet one more all-time high in 2024 because the post-election rally for digital assets maintains its momentum.
Bitcoin, the most important cryptocurrency by market cap, is up 50.67% since Election Day, and the present rally — which was initially propelled by Donald Trump’s deregulatory pro-crypto platform — continued after the president-elect announced his desire to create a strategic bitcoin reserve.
Bitcoin has since surpassed silver to turn out to be the eighth-largest asset on the earth, in keeping with crypto news platform Watcher.Guru, and is rapidly approaching a $2 trillion market cap, which might put it on par with Google’s parent company, Alphabet, in valuation.
With bitcoin having gained 133% thus far this yr, some investors could also be wondering how much higher it may possibly go before a sell-off would bring prices back all the way down to Earth. While there is not any crystal ball indicating when that would occur, examining the crypto market’s current drivers in addition to bitcoin’s historical price motion can provide context.
The Trump effect on bitcoin
Bitcoin was already having fun with a powerful yr before Trump won the presidential election on Nov. 5. Nevertheless, because the Republican was declared the winner, the crypto market has been surging. Along with bitcoin’s aforementioned gain, ethereum is up 62%, and Elon Musk-endorsed dogecoin is up 180%.
Much of this might be attributed to Trump’s increasingly vocal support of crypto — an asset class he once dismissed as a “scam” and “disaster waiting to occur.” However the president-elect has modified his tone over the past yr, and on Oct. 15, he launched his own token, World Liberty Financial, which had an initial valuation of $1.5 billion.
On the campaign trail, Trump courted crypto enthusiasts by proposing plans to bolster bitcoin mining, which he has likening to a function of domestic manufacturing. He has also pledged to finish initiatives like Operation Chokepoint 2.0, which could remove barriers for crypto businesses in accessing banking services, and stated that he intends to defend self-custody rights while opposing central bank digital currencies.
Things are moving quickly. Earlier this month, Trump named crypto fanatic Musk as head of the brand new Department of Government Efficiency (DOGE). Securities and Exchange Commission Chair Gary Gensler, a notorious crypto critic, announced Thursday his intent to resign on Jan. 20: Trump’s inauguration day. And on Nov. 22, Reuters reported that a “slew of crypto corporations including Ripple, Kraken and Circle are jostling for a seat on President-elect Donald Trump’s promised crypto advisory council, looking for a say in his planned overhaul of U.S. policy.”
The mixture of an incoming administration that is been clear in its crypto-friendly intentions combined with an already strong year-to-date performance for bitcoin is underscoring the continued bull marketplace for digital assets.
What bitcoin’s price chart tells us
If history is any indication, bitcoin will likely experience a steep sell-off within the wake of it crossing over $100,000 as each retail and institutional investors look to lock in gains, adding to the expanding list of bitcoin millionaires.
Looking back at bitcoin’s last two major run-ups in price — which culminated on Nov. 13, 2021, when it hit a then-record $64,402.50, and on March 13, 2021, when it hit a then-record $61,190.87 — each instances were followed by considerable corrections.
From its then-high on March 13, 2021, a bitcoin sell-off resulted in a 48.46% plunge that saw prices bottom out at $31,539.02 on July 17, 2021, before starting to climb higher. And from its then-high on Nov. 13, 2021, bitcoin lost 73.94% during a protracted bear market that was known as “crypto winter.” That sell-off lasted for greater than a yr before prices bottomed at $16,449.59 on Nov. 26, 2022.
If bitcoin does experience a price reversal after setting this all-time high, it may very well be much more pronounced as probably the most recent gains have been parabolic, denoting a rapid and dramatic increase in price over a brief time frame.
The Relative Strength Index (RSI) — a momentum indicator utilized in technical evaluation that identifies likely points of reversals based on historical price motion — can be suggesting that a steep sell-off may soon follow. The RSI generally plots points from 30 to 70. When the indicator is around 50, it’s neutral. When the RSI reading is near or below 30, the equity — be it a stock, exchange-traded fund or crypto — is taken into account “oversold” and prone to experience a price reversal and head higher.
Alternatively, when the RSI is approaching or above 70, the equity is taken into account to be “overbought” and prone to see prices fall. Currently, when bitcoin’s year-to-date chart — the RSI is reading 72.51, which is firmly in overbought territory and may very well be indicative of a looming price reversal.
Nevertheless, with the Trump administration occupying the White House starting in January, conditions for a continued crypto bull market might be in place. That might blunt an prolonged price correction for bitcoin.
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